Financial institutions play a critical, but often overlooked role in preventing illegal online gambling transactions. While navigating the complex web of compliance obligations under federal and state banking statutes, banks, payment processors, and other fintechs may not focus on the Unlawful Internet Gambling Enforcement Act (UIGEA).1 This is the federal law that grants financial institutions gatekeeping power over the online gaming industry. Given the continued expansion of gaming, both licensed and unlicensed, it is an opportune time for banks and payment processors to assess their compliance with UIGEA and its implementing regulation, Regulation GG.2
Expansion of Gaming Means Banking More Gaming Customers
The repeal of the Professional and Amateur Sports Protection Act (PASPA) in 2018 triggered a widespread expansion of gaming in the U.S.3 As a result, financial institutions are encountering more customers that operate online gambling and gaming platforms. These platforms run the gamut from traditional, regulated iGaming casino games and mobile sports wagering to sometimes regulated daily fantasy sports to emerging forms of unregulated gaming involving sweepstakes, skill, artificial intelligence (AI), and prediction markets, which may be difficult to classify. Banks and payment processors that historically had declined to take on online gambling customers may be considering moving into the space given the opportunity for new, high transaction volume business.
Scope and Application of UIGEA and Reg GG
UIGEA prohibits gambling businesses from knowingly accepting payments related to unlawful internet gambling. 4 To enforce this prohibition, Regulation GG designates certain payment systems which "could" be used in connection with unlawful internet gambling ("restricted transactions") as subject to UIGEA.5 Financial institutions participating in these payment systems generally must establish and implement policies and procedures designed to identify and block or otherwise prevent or prohibit restricted transactions.6
Who must comply with Regulation GG? Regulation GG applies to all participants in designated payment systems, including banks, credit unions, and payment processors with some exceptions. As one of the federal regulators of Reg GG, the Office of the Comptroller of the Currency, has stated, "In general, non-exempt participants are those that establish or maintain accounts for commercial customers and are in a position to conduct due diligence on the customer."7 If your institution is involved in processing payments through systems such as automated clearing houses (ACH), card systems, check collection systems, or money transmitting businesses, you may be subject to these requirements.8
Under Regulation GG, institutions are required to develop and implement policies and procedures that establish measures "reasonably designed to identify and block, or otherwise prevent and prohibit, restricted transactions."9 This includes due diligence in account opening and ongoing monitoring to ensure customers are not processing payments related to unlawful internet gambling. Additionally, institutions subject to Regulation GG must identify any of its payment systems that could be used for restricted transactions and ensure appropriate controls are in place for each system. Regulation GG also requires such institutions to conduct due diligence when establishing customer relationships, particularly with commercial customers and the nature of their business and the potential for involvement in internet gambling activities. Continuous monitoring of transactions for signs of restricted activities and reporting any suspicious activities in accordance with applicable laws and regulations is also required.10
Reg GG Enforcement
Various federal banking agencies enforce compliance with Regulation GG by conducting examinations. Along with these federal regulators, state banking agencies perform similar roles for state-chartered banks.11 Failure to comply with Regulation GG can result in significant legal, financial, and reputational repercussions, including regulatory enforcement actions where regulators may impose penalties, sanctions, or other corrective measures on institutions that fail to implement adequate controls to prevent restricted transactions, or lawsuits resulting from non-compliance.12 While public enforcement actions for financial institution UIGEA violations have been few and largely focused around the shutdown of certain online poker sites in the 2010s, these risks are still present.
As courts, legislators, and regulators scrutinize new unlicensed forms of gaming for compliance with gambling law, financial institutions are finding themselves sharing the spotlight with operators in some cases. For example, a putative class action is pending in the U.S. District Court for the Middle District of Florida against a sweepstakes gaming operator and its payment processor for alleged illegal gambling violations under Florida law.13 In addition, anti-gambling legislation that targets payment processors in addition to operators and other vendors and suppliers has been circulating in a growing pool of states.14 As an example, New York recently passed a legislation through both houses of its state legislature that makes it "unlawful for any applicant, licensed entity, financial institution, payment processor, geolocation provider, gaming content supplier, platform provider, or media affiliate to support the operation, conduct, or promotion of online sweepstakes games within the state of New York."15 That bill is now on the New York Governor's desk.16 With more eyes on financial institution involvement in gaming activity in recent days, we could see increased inquiries and enforcement actions with respect to Regulation GG.
Compliance Next Steps
To ensure compliance with Regulation GG, we recommend reviewing and updating your current policies and procedures related to payment processing to ensure they align with Regulation GG requirements, providing training to relevant staff on identifying and handling restricted transactions, enhancing due diligence processes to identify customers who may be involved in internet gambling activities, and implementing robust monitoring systems to detect and prevent restricted transactions.
Nelson Mullins' Gaming Industry Group includes an experienced team of gaming and financial services attorneys who regularly advise clients on these types of matters. Banks, payment processors, and other financial institutions who are subject to UIGEA should retain qualified counsel to assist them with vetting and onboarding of customers who offer online gaming products and compliance with applicable law.
Footnotes
1. Unlawful Internet Gambling Enforcement Act 31 U.S.C. §§ 5361-5367 (2006).
2. Prohibition on Funding of Unlawful Internet Gambling (Regulation GG), 12 C.F.R. pt. 233 (2025).
3. Brett Smiley, SportsHandle.com, From PASPA To Present: An Oral History Of The U.S. Sports Betting Gold Rush (May 11, 2023), https://sportshandle.com/paspa-oral-history-five-year-anniversary/
4. Office of the Comptroller of the Currency ("OCC"), OCC Bulletin 2010-17: Unlawful Internet Gambling Enforcement Act of 2006: Examination Procedures (May 20, 2010), https://www.occ.gov/news-issuances/bulletins/2010/bulletin-2010-17.html. As of May 20, 2010, the OCC issued interagency guidance for reviewing compliance with the joint rule promulgated by the Department of the Treasury (Treasury) and the Federal Reserve Board pursuant to the UIGEA. See also https://www.occ.gov/news-issuances/bulletins/2010/bulletin-2010-17a.pdf.
5. See Bd. of Governors of the Federal Reserve, Compliance Guide to Small Entities Regulation GG: Prohibition on Funding of Unlawful Internet Gambling, https://www.federalreserve.gov/supervisionreg/regggcg.htm
6. See id.
7. Office of the Comptroller of the Currency ("OCC"), OCC Bulletin 2010-17: Unlawful Internet Gambling Enforcement Act of 2006: Examination Procedures (May 20, 2010), https://www.occ.gov/news-issuances/bulletins/2010/bulletin-2010-17.html.
8. See id.
9. 12 C.F.R. § 233.1(b) (2025).
10. See Bd. of Governors of the Federal Reserve, Compliance Guide to Small Entities Regulation GG: Prohibition on Funding of Unlawful Internet Gambling, https://www.federalreserve.gov/supervisionreg/regggcg.htm
11. See Conference of State Bank Supervisors, State Financial Regulation 101, available at CSBS.
12. See Office of the Comptroller of the Currency, OCC Bulletin 2010-17: Interagency Guidance on the Unlawful Internet Gambling Enforcement Act of 2006 (June 30, 2010), available at https://www.occ.gov/news-issuances/bulletins/2010/bulletin-2010-17a.pdf (detailing the procedures for reviewing compliance with UIGEA).
13. See Knapp v. VGW Holdings Ltd., No. 6:24-CV-413-CEM-DCI, 2025 WL 452490, at *1 (M.D. Fla. Feb. 6, 2025), reconsideration denied, No. 6:24-CV-413-CEM-DCI, 2025 WL 881326 (M.D. Fla. Mar. 12, 2025), and appeal dismissed, No. 25-11156, 2025 WL 1366926 (11th Cir. May 12, 2025).
14. See, e.g., Brad Senkiw, Covers, New York Lawmakers Pass Sweepstakes Ban Bill and Send to Governors' Desk, (Jun. 18, 2025), https://www.covers.com/industry/new-york-lawmakers-pass-sweepstakes-ban-bill-and-send-to-governors-desk-june-18-2025 (discussing New York legislation); Cheryle Shepstone, Sweepsy.com, California Legislators Target Sweepstakes Casinos, Backed by Tribal Gaming Coalition, (Jun. 21, 2025), https://www.sweepsy.com/news/california-legislators-introduce-sweepstakes-bill/ (discussing California legislation).
15. S.5935A, 206th Gen. Assem., at 2, (N.Y. 2025), available at https://www.nysenate.gov/legislation/bills/2025/S5935/amendment/A
16. See, e.g., Brad Senkiw, Covers, (Jun. 18, 2025), https://www.covers.com/industry/new-york-lawmakers-pass-sweepstakes-ban-bill-and-send-to-governors-desk-june-18-2025
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